On 5th February, 2022, Bitcoin reached its highest level in two weeks, continuing the previous session’s robust gains as cryptocurrencies benefited from a revival in risk appetite and a stock market rise. The world’s largest cryptocurrency touched $41,983, up roughly 16 percent from 3rd February’s lows and up 27 percent from the year’s low of $32,950.72 on 24th January. The article is about Why Bitcoin Hits 2-Week High Following Stock Rally?
Since 21st January, Ether, the cryptocurrency tied to the Ethereum blockchain network, surpassed the $3,000 mark for the first time. Bitcoin’s 11%+ advance on 3rd February was the highest single-day gain since mid-June and the first substantial rebound after weeks of being roiled, along with technology and growth sectors, by worries of faster-than-expected Fed rate hikes to tame inflation.
It coincided with a surge in U.S. stocks, with the tech-rich Nasdaq (.IXIC) concluding the week with gains amid considerable volatility from earnings, including Amazon’s strong growth and Meta Platforms Inc’s (FB.O) poor results. Those synchronized changes demonstrated how bitcoin has evolved into a favored asset, shocked by risk appetite swings.
“The current panic and volatility surrounding bitcoin is based on a fundamental misunderstanding of it as an asset class,” said Ed Hindi, a chief investment officer of Swiss-based cryptocurrency hedgefund Tyr Capital. “When valuations on the Nasdaq fall, misguided institutional investors start liquidating bitcoin positions en-masse as if it were a tech stock.”
On the day, the rebound in equities supported other listed crypto assets, with miner Riot Blockchain (RIOT.O) seeing a lift after announcing that bitcoin output more than quadrupled in January compared to a year ago. Marathon Digital Holdings (MARA.O) and cryptocurrency exchange Coinbase Global (COIN.O) both surged more than 7% after announcing higher bitcoin output.
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